Kyle Township charges residents $100 per year to license household pets. As specified in a statute enacted in 2008, residents are required to purchase a license by October 1 of each year; the license covers the period October 1 through September 30. The license fees are not refundable. The statute authorizing the fees specifically states that the revenues are to be used to support the township's animal control program.
The program, which will be carried out throughout the year, is not expected to receive financial support from any other sources. During the calendar year 2008 (which corresponds to the township's fiscal year), the township collected $36,000 in license fees for the 2008-2009 licensing period.
1. Prepare a journal entry to record the township's receipt of the license fees.
2. Would you consider the license fees to be exchange or nonexchange revenue? Explain.
1. Assuming it is a fund for which revenue is estimated and budgeted, there would have been an entry at the beginning of the fiscal year to record estimated revenues:
Debit: License Fees Receivable 36,000 (or some other budgeted amount)
Credit: Revenues - License Fees Tax 36,000
Then when funds are collected, the entry to ...
Government Accounting: Kyle Township journal entries to record receipt of pet license fees. Would you consider the fees to be exchange or non-exchange revenue? The solution discusses the difference with examples.